A refinanced project keeps its interest reduction payments only if the owner binds itself and every subsequent owner to the affordability restrictions for the payment term plus five years

s236.affordability_period.refinancing_binding_commitment_plus_five_years · v1.0.0

A project for which interest reduction payments are made and whose mortgage has been refinanced continues to receive those payments under the terms of the payments contract, but ONLY if the project owner enters into such binding commitments as HUD may require, which shall be applicable to any subsequent owner, to ensure that the owner will continue to operate the project in accordance with all low-income affordability restrictions connected with the Federal assistance for a period of not less than the term for which the interest reduction payments are made plus an additional five years. The commitment runs with the project rather than with the person who gave it, so a purchaser acquiring a refinanced Section 236 project takes the affordability restriction and the five-year tail with it. This is the provision an acquisition diligence most often misses, because the restriction may sit in a commitment document rather than in the recorded regulatory agreement.

Confidence

high

Effective from

1996-09-26

Consequence model

contract remedy

Last reviewed

2026-08-29